Boy, I’m tickled pink to see the way the gold market is behaving, and I assume you are too!
Just this week, it’s up a whopping $43 in the June contract.
Who knows? Unless you get a brief correction here, in another few days, it could be approaching the $700 level. Soon $1,000 will be within easy reach. And what’s especially exciting is the fact that the higher gold goes the faster it moves!
But if you think gold bullion is hot, wait till you see what’s happening in the gold shares! One gold miner on Sean’s radar screen is up 33% just in the past three days. 
Another’s up 30%. Yet a third has surged 96% in one month!
This is bigger and better than the great gold frenzy of 1979-80. And it’s just beginning!
So if you want to jump in, it simply does not make sense for you to wait around to see what’s going to happen next.
Plus, Sean’s good at timing. If anyone can get you in on a temporary pullback, he will.
That way, you’re not chasing the market and you’re ready for the next big surge. The number to call is 800-898-0819.
Meanwhile, I’m watching the same 
fireworks from the other side of the world — in Thailand.
And this past weekend, I visited Chiang Mai in the north. The city lies in a fertile valley surrounded by a wall of mountains along the Ping River, a traditional trade route from Burma and China to the Gulf of Siam.
Unlike Bangkok, where few temples are more than 200 years old, Chiang Mai’s temples are as old as the city, which is celebrating its 710th anniversary this year.
At one of the temples, I took this picture of a reclining Buddha encrusted with 24k pure gold leafing, placed on it by Thais making blessings for the Thai New Year (April 13).
At another, I was amazed to watch the steady stream of individuals, couples and families arrive with gold leafing in their pockets.
To the Thai Buddhists, gold symbolizes eternity and the circle of life. Only in the last 300 years or so has gold in Thailand taken on another, important meaning: wealth.
But to me, “eternity†and “wealth†are very intertwined. And that’s the main reason I think gold is the only real form of money.
Indeed, gold is the only asset that has held its value and purchasing power for thousands of years. During short periods in time, gold may be less desirable than others. But in the long term, gold has always held its value.
Right now, gold has just sliced through $600 an ounce like a knife through butter, and has even pierced my $618 target. According to my models, that clears the way for my next major target of $740 an ounce.
Above that, you’re looking and $780 … $900 … even $1,000 an ounce, and ultimately, much higher.
In fact, in terms of today’s dollars, just for gold to reach the equivalent of its 1980 high, it would have to sell for $2,176 an ounce.
And this estimate is not just based on history. The fact is there is now massive upside price pressure in the gold market.
According to a Chiang Mai gold dealer I talked to last week:
“I’ve never seen anything like it. Buyers are pouring in like there’s no tomorrow. I sell everything from gold coins to gold ornaments to gold tea kettles. And these days, my customers are also more sophisticated. Many even want to negotiate the premiums over spot gold. I have never seen a gold fever like this one.â€
I asked him what he attributed it to, and he cited several reasons:
“First, the domestic political scene in Thailand is in chaos right now. Second, oil and gas prices are soaring, pushing up prices of everything, from energy costs to fruits, vegetables, and even rents. Third, the U.S. dollar is weakening. Everyone knows it. And everyone is also very worried about the Iran situation.â€
He told me he’s bumped up his gold inventories to their highest levels ever, and the yellow metal is still flying off the shelves.
While he attended another customer, I sipped northern Thai coffee, and perused the local Mai newspaper, which, not coincidentally, included a major story about the recent 20th biannual Mideast Watch and Jewelry Show in Sharjah on the Persian Gulf. That’s the Middle East’s flashiest jewelry event, attended by diplomats, government officials and 300 of the largest jewelers from around the globe.
The event’s director, Saif Al Midfa, explained the gold phenomenon this way: “Despite the rise in gold prices, consumers … particularly in the UAE gold market, continue to be in high spirits. And from my recent ventures around Asia — as well as the U.S. — the same holds true for just about every jewelry buyer I’ve run into, bar none.â€
Wedding Season
Around the Corner
This morning is a beautiful spring day in the countryside outside Bangkok. The sun shines bright and the rice fields and forests are so green, they look surreal.
So with all these sights and sounds, I can’t help but be reminded that wedding season around the globe is about to kick off.
What does that mean for gold jewelry sales? Big demand!
Wedding season — which runs from Memorial Day through September — is a major demand driver for gold. And with gold prices soaring, shoppers in the U.S. can expect to pay least as much as 20% more for wedding rings and other gold pieces compared to last year.
Now, figure that U.S. consumers bought a mind boggling $18 billion in gold jewelry last year and all of a sudden we’re staring right in the face of stunning U.S. jewelry sales this year.
I’m talking $22 billion — perhaps even $25 billion — in sales, just in the U.S.A! Worldwide, I also expect to see record demand.
Nanotechnology and Gold
I’m on my cell phone trying to send an email to my research team back in the U.S. The sun is so bright I can hardly see the keypad, and the buttons are so small they’re tough to use for typing.
When it comes to technology, making products that are smaller and can operate faster is a constant theme.
Right now, super-exciting, new nanotechnology applications are being developed, and guess what: They use gold, opening up yet another source of demand for the yellow metal.
The applications are varied and many: Low resistance printable gold nanoparticulate inks … gold nanowires … coatings using gold nanoparticles … nanoparticulate gold catalysts for pollution control … even goldsilica nanoshells for the targeted destruction of cancer cells.
Gold works at these molecular levels for loads of reasons including resistance to oxidation, nanoscale optical properties, outstanding surface chemistry, and many others.
In fact, gold is one of the very few metallic elements that’s ideal for the coatings needed in nanotechnology.
Gold for DNA Research
Just last week, scientists at Northwestern University announced they’ve developed a detection system — called colorimetric screening — to help discover DNA along with the small molecules and proteins that bind to DNA. The element that makes this possible: Gold!
It’s considered a breakthrough discovery. Pharmaceutical companies could eventually use the gold-based screening process to help find new anti-cancer drugs.
According to Chad A. Mirkin, the scientist who led the studies, pharmaceutical companies are targeting DNA for different therapies, and they need to identify DNA or small molecules that selectively bind to DNA to turn on or off the gene expression related to a particular disease. So far, gold is the most efficient metal found to do the job.
Gold Demand
Is Skyrocketing
Brace yourself. The latest gold stats — and the outlook for 2006 — will knock your socks off:
In 2005, gold jewelry demand was up 14% to $39 billion … industrial demand jumped 11% to $6 billion … and gold investment demand surged a mind boggling 37% to $9 billion.
All told, gold demand worldwide skyrocketed 16% to a stunning $54 billion!
Meanwhile, gold mine production was up a measly 1%, not nearly enough to keep up with demand. That translates to massive upward pressure on gold prices.
I’m not surprised, and you shouldn’t be either. I’ve been telling my readers for years about the strong supply-demand forces driving gold higher. And how those factors are getting stronger by the day.
Nor was I taken aback by the jewelry or industrial demand figures. These, too, were pretty much in line with what I’d been thinking.
But I WAS surprised about the big pop in gold investments. So I dug a little deeper. Here’s what I found:
First, gold exchange-traded funds (ETFs) grew by a massive 67% in dollar terms in 2005. And the lions-share of that increase — a mind boggling 83% of gold tonnage — was soaked up by my gold ETF-of-choice: The StreetTRACKS Gold Shares (GLD).
Second, over and beyond the gold buying for ETFs, my figures tell me that the bulk of the surge comes from new buying. That means gold is coming off the market. It is not coming from sales of gold bullion coins or bars, that are then being reinvested in the ETF.
So the ETF is doing more than shuffling demand from one vehicle to another. By making gold conveniently available to investors in units as small as 1/10th of an ounce, it’s bringing in new investors and broadening out gold’s investment potential.
Why You Haven’t
Seen Anything Yet
There are going to be some bumps ahead in this gold market. But buy any price dips you see. Gold is headed MUCH higher.
Ditto for gold shares. Hold all core gold shares that I’ve recommend in my Real Wealth Report, and all the gold funds I’ve talked about here in recent months.
Also don’t neglect the companies with the potential to be the next 1,000% winners. That’s the kind of gain we saw with stocks like Glamis Gold in the first phase of this gold boom.
Now, we’re in the second, more dramatic phase, and we’re likely to see 1,000% gains again. Perhaps more.
Best wishes,
Larry Edelson
Editor, Real Wealth Report
For more information and archived issues, visit http://legacy.weissinc.com.
About MONEY AND MARKETS
MONEY AND MARKETS (MAM) is published by Weiss Research, Inc. and written by Martin D. Weiss along with Larry Edelson, Tony Sagami and other contributors. To avoid conflicts of interest, Weiss Research and its staff do not hold positions in companies recommended in MAM. Nor do we accept any compensation for such recommendations. The comments, graphs, forecasts, and indices published in MAM are based upon data whose accuracy is deemed reliable but not guaranteed. Performance returns cited are derived from our best estimates but must be considered hypothetical inasmuch as we do not track the actual prices investors pay or receive. Contributors include Jennifer Moran, John Burke, Beth Cain, Red Morgan, Ekaterina Evseeva, Amber Dakar, Michael Larson, Monica Lewman-Garcia, Julie Trudeau and others.
© 2006 by Weiss Research, Inc. All rights reserved.
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